June 19, 2024


Home living innovation

Guide to Home Renovation Costs in 2021

Performing a whole-home renovation is by no means a small or inexpensive task. However, with a little planning and forethought, homeowners can ensure that this remodeling project stays as affordable as possible. With that in mind, below is a primer on the cost to completely renovate a house. Read it over to get a better idea of what to expect for your bottom line.

What is the average cost to gut and remodel a house?

According to HomeAdvisor (NASDAQ: ANGI), the average cost of a home remodel in 2020 was $46,755. However, that number may only take into account homeowners who completed one or two projects at a time.

HomeAdvisor’s data for the renovation costs to gut and remodel a home shows that most homeowners can expect to spend somewhere between $100,000 and $200,000 on a whole-home renovation.

What factors affect the cost to gut and remodel a house?

There are multiple factors that will impact how big you can expect the final bill for your remodel to be, including:


Generally speaking, renovating older homes costs more than newer ones. Older homes are more likely to have underlying problems that need to be dealt with during construction. The renovation work required to get older homes to meet current building codes may also be more extensive.


Similarly, the more square footage a home has, the more expensive it will be to renovate. HomeAdvisor found that the average cost of renovating multiple rooms in a 1,000-square-foot house is $19,000. At the same time, the average cost to renovate a home with 4,000 square feet was $100,000.


The cost of your remodel will also be affected by the cost of living in your area. HomeAdvisor states that remodeling and refurbishing a home is likely to cost $21,000 to $90,000 in New York City. However, a similar project in Denver, Colorado, would likely only run between $13,000 and $56,000. The base costs for materials like appliances and countertops, as well as the labor costs for a general contractor may also be more expensive depending on where you live.

Room selection

The next piece of the puzzle is to consider which rooms of the home are being renovated.The kitchen and bathroom, for example, are two of the most expensive rooms to remodel. The average cost for a kitchen remodel in 2020 was $20,000, with higher-end projects coming in closer to $50,000. On the other hand, a bathroom renovation costs between $6,000 – $35,000, depending on what fixtures you choose and if you’re moving any plumbing.

On the other end of the spectrum, a living room or bedroom renovation project tends to range between $1,500 and $5,500. In particular, a master bedroom renovation tends to fall on the higher end of that spectrum, especially if the homeowners have their hearts set on moving walls to create a new walk-in closet.

Material and labor choices

The last factor that affects the price of a remodeling project is material and labor choices. Remodeling Magazine estimates that hiring labor as opposed to going DIY can inflate your job cost by anywhere from 18.6% to 50.8%. By the same token, choosing more costly materials like high-end appliances or semi-custom cabinets when renovating will also add to the final cost.

How to budget for a home renovation

Now that you know what factors can affect the cost of your home renovation, let’s take a closer look at how to create a realistic budget for the renovation project. When done right, a renovation can put a lot of equity in your pocket. Follow the steps below to come up with a budget that works for you.

Consider your financing options

Since most people can’t afford to pay for a whole-home renovation in cash, the first step toward budgeting for a home remodel is to consider your financing options. There are a few different ways that homeowners may choose to cover these costs.

We’ll get into more specifics about the various renovation loan options that are available to you below, but the important thing to note right now is that getting your financing in order first will give you a firm idea of how much you have to spend.

Decide what you want

Once your financing is in place, the next step is to get clear on how you want the finished remodel to look. When you get estimates, each contractor will ask you for this information. The more detail you can give them, the more accurate your estimates will be.

With that in mind, take some time to look at design inspiration online or go to showrooms for different home products like kitchen cabinets or hardwood floors. Looking at the various options that are out there will not only help you get clear on your personal sense of style but it will also give you a better idea of what you can expect to spend.

Get a few estimates for your house renovation

After you’ve defined a vision for your remodeling project, collect estimates from a general contractor for what the house renovation costs. When you’re trying to stick to a renovation budget, you may want to ask for a “hard” estimate, which includes a detailed list of the costs for the project, as well as the timeline. However, keep in mind that since those outlines take a fair amount of time to put together, you may be charged for the service.

Plan for the unexpected

Remodeling projects often end up costing more than their initial estimates because of unexpected road bumps that occur along the way. With that in mind, when putting your budget together, you may want to pad the estimates that you receive in order to account for unanticipated expenses. It’s generally a good idea to add an additional 10% to 20% to the budget for those costs.

Options for financing a complete home renovation

As mentioned above, there are many options for covering the remodel costs of a complete home renovation. We’ve listed the most common ones below for your consideration:

FHA 203k loan

If you’re just moving into the home you plan to remodel, consider using an FHA 203k home improvement loan. A 203k loan allows you to wrap the cost of repairs up in your mortgage, meaning you only have to worry about making one loan payment. On the plus side, these loans often offer lower interest rates than other types of financing. However, they are also highly regulated, and there are specifications for how money must be spent.

Cash-out refinance

A cash-out refinance involves refinancing your existing home loan and taking out more money than you currently owe on your home. The excess money from the loan is given to you in cash and can be put toward anything you’d like, including your new kitchen renovation or bathroom remodel.

Refinancing your loan also typically offers better interest rates than other financing options. However, it comes with a big caveat. Since your home will be used as collateral when you do a cash-out refinance, if you become unable to make the monthly payments on your renovation loan, you could be at risk for foreclosure.

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) works more similarly to a credit card than an installment loan like you’d find with a cash-out refinance. In this case, you’ll be able to borrow money against the equity in your home, as needed, up to a limit predetermined by your lender.

That flexibility is what makes HELOCs a particularly good option as a renovation loan. However, like the 203k loan and cash-out refinancing, it also comes with a potential foreclosure risk if you stop making your monthly payments.

Personal loan

In contrast, personal loans are unsecured, which means they’re not tied to an asset like your home. Instead, your approval for the loan is based on personal factors like your debt-to-income ratio and credit score. That said, a personal loan will typically have the highest interest rates out of all the options on this list.

Tips for saving on home renovation costs

Choose your materials carefully

Materials are usually the most variable expense in a whole home remodel. Using all high-end materials can add thousands of dollars to your final costs. If you’re trying to stick to a budget while renovating, your best bet is to choose where to splurge and where to save. As a rule of thumb, it’s best to invest the most money in each room’s focal point features, like high-end appliances, and to choose midrange items everywhere else.

Bear in mind that high-priced items are often priced by the square foot, so you’ll also want to keep the size of the room in mind when you’re creating your budget. Generally, the more square footage there is, the more you can expect the material to cost.

Keep the layout the same

Put simply, the cost of moving plumbing and electrical features can add up fast. You can save money on a kitchen renovation, for example, if you leave the appliances where they are and keep the layout as is. In this case, you can spend your money simply adding semi-custom cabinets, fresh fixtures, or new countertops instead.

The bottom line

Remodeling an entire house is obviously going to be a costly undertaking. However, when carefully planned, it is possible to create and stick to a realistic budget. Use the information above to help you wrap your head around the cost to completely renovate a house. Armed with the right knowledge – and the right renovation loan – you’ll be able to come up with a financial plan that works for you.